How much does a typical life insurance policy cost?

 Average cost of life insurance policy in India

The cost of a life insurance policy depends on the premiums you pay to the life insurance company. The amount of premiums payable depends upon the type of policy, term of policy contract, sum assured and your age. You could pay these premiums monthly, half-yearly, annually or as single premiums. 

For example, you can get term life insurance plans starting at Rs.13 per day in India. 

How do I choose a good life insurance policy?

To choose a life insurance policy, one should consider their needs, budget, goals, and the type and duration of coverage they want. There are two main options: term life and whole life insurance policies. 

Term life policies are less expensive and provide coverage for a set period, while whole life policies are more expensive and provide coverage for the entire life. 

One should also check the details of the policy, such as inclusions, exclusions, life coverage, company records, solvency ratio, and claim settlement ratio. 

One can compare various policies offered by various institutes and consult an advisor if necessary. One can also claim tax exemption under section 80C of the Income Tax Act.

What is the claim settlement ratio?

The claim settlement ratio is the ratio of the number of claims settled by an insurance company to the total number of claims received by it during a financial year. It is an important parameter to consider while choosing a life insurance policy as it indicates the insurer's ability to settle claims. A higher claim settlement ratio indicates that the insurer is more reliable and efficient in settling claims.

The claim settlement ratio (CSR) is a metric that helps understand the number of claims paid against the number of claims received by the insurer. This ratio helps assess the insurer’s commitment to delivering insurance claims settlement. The formula for calculating the CSR is:

CSR = (Total number of approved claims / Total number of received claims) x 100

The figure that is arrived at is always represented as a percentage. 

What is a good CSR?

A good claim settlement ratio (CSR) is generally considered to be 90% or above. This is because 90% is an indication that the insurance provider has settled 90 of the 100 claims they have received during a financial year². However, it is important to note that CSR varies from company to company and from product to product. 

How can I compare different insurers based on their CSRs?

You can compare different insurers based on their CSR by visiting the official website of the insurance company. CSR applies to all insurance products, not just term policies. You can also find the CSR of different insurance companies on third-party websites such as Policybazaar .